For Sale in ... Panama

This one-bedroom duplex apartment is in Casco Viejo, the charming colonial district in Panama City, which is undergoing a renaissance.Credit
Tito Herrera for The New York Times

REFURBISHED APARTMENT IN HISTORIC CASCO VIEJO, PANAMA CITY

$450,000

This one-bedroom duplex apartment is in Casco Viejo, the charming colonial district in Panama City, which is undergoing a renaissance. The apartment, part of a three-story seven-unit building with an interior courtyard on a red-brick street, was built in the 19th century and renovated in 2006. Historic features include an exposed 17th-century stone wall, part of an older building that once stood in this spot.

On the first floor, the living room has arched windows that look out over the shared courtyard. There is also a dining room with built-in floor-to-ceiling bookcases, and a powder room. The kitchen, at the back of the apartment, overlooks a private patio with an outdoor eating area. A staircase leads up to the bedroom, a walk-in closet and a bathroom.

The building is a blend of French and Spanish colonial architecture. The exterior is stucco, with decorative iron balconies and a roof made of Spanish clay tiles. There is a shop on the ground floor that serves French-style ice cream.

Casco Viejo, or Old Town, was built on a rocky peninsula after the original Panama City was destroyed. Designated a Unesco World Heritage site in 1997, it has recently undergone an expatriate and artists revival, with many crumbling colonial buildings carved into condominiums. There are several restaurants, a jazz bar and the Pacific Ocean within walking distance. The international airport, on the other side of town, is 30 to 90 minutes away, depending on traffic.

Prices have softened in Panama, but they haven’t crashed, said Robert Adams, chief executive officer of New Global Initiatives, a global marketing company in Maryland that researches emigration from the United States. Mr. Adams, who lives in Panama City, said most banks in Panama lend foreign buyers a maximum of 70 percent of the purchase price, although Panamanian citizens can borrow up to 80 percent.

Panama City and outlying beach towns are popular with expatriates, Mr. Adams said. A beachfront house in Coronado, about an hour’s drive west of Panama City, averages about $1 million, according to Simon Hurst, managing director of Knightsbridge Investment Group, a real estate firm in Panama City. Houses not directly on the beach cost much less, around $350,000. Prices drop the farther you go from Panama City, but in remote parts of the country, the high costs of transporting materials outweigh any other savings, Mr. Adams said.

Prices for a comfortable apartment in Panama City range from $175,000 to $400,000, Mr. Adams said. In Casco Viejo, one of the few areas in the city with historic architecture, prices tend to be a little higher. According to Mr. Hurst, property is in limited supply in Casco Viejo so it sells very quickly — especially renovated apartments in historic buildings. He estimates that there are fewer than 1,000 historic buildings, of which only about 20 percent have been renovated. Although the area has little new construction, apartments are available preconstruction for about $2,300 per square meter ($214 per square foot), Mr. Hurst said. Refurbished apartments start at that price.

WHO BUYS IN PANAMA CITY

Panama is gaining popularity as a retirement destination, Mr. Adams said, describing people from the United States as the biggest group of foreign buyers. There are also a significant number of European and Canadian retirees. Mr. Adams added that people from Colombia, Venezuela and other Latin American countries are also starting to buy.

BUYING BASICS

"Buying real estate in Panama is easy," said Mr. Hurst, adding that the only significant overhead costs come in legal fees, which average $1,500 to $2,000. The seller pays a transfer tax equal to 2 percent of the purchase price, as well as the real estate agent’s commission, usually about 5 percent, he said. The seller also pays capital gains taxes of 10 percent of the profits made on the property.

Many people set up a corporation to buy property. Mr. Hurst says that it costs about $1,000 to set up such a corporation, and that there are tax advantages when the property is sold.

The local currency, the Panamanian balboa, is pegged to the United States dollar, but the dollar is also accepted in Panama. Mr. Hurst says real estate is priced in dollars.

Monthly fees run about $115 a month, and cover building maintenance and a concierge who cleans communal areas. No property taxes will be assessed until 2035 because of a tax abatement program designed by the Panamanian government to encourage development and investment, according to Mr. Hurst.